Boyd's new boss William Bechtel had closed off Don's cash flow by refusing to release money owed to Don. Furthermore the FBI's many visits to people and businesses telling them of Don's guilt and warning them not to do business with him further crippled his finances.
Long before the indictment or the convening of a Grand Jury on Friday, September 15, 1978, Don's corporate attorney for Boyd and Associates, Daniel (is this the name?) Davis told him that he had a "conflict of interest" and could not represent him. Davis was a good friend of Walter Mondale's chief aide, Michael Berman who like Davis was a Duluth boy. Davis, who would later be disbarred, told Don that he would need a criminal not a corporate defense attorney.
The Grand Jury worked feverishly and Don was arrested the following Monday, Sept. 18th. Don briefly hired the big Minneapolis law firm of Fagre & Benson to represent him. His attorney Mark Geghan gave him the only really useful lawyering he got but it only lasted through Don's arraignment and the setting of bail. Keeping Geghan through the trial would have cost Don $50,000 and by now he had no money.
It would be as useful to the prosecution as it had been for the FBI to keep Boyd in a state of penury because he was not able to afford legal advice which might have thwarted the most aggressive of the FBI's tactics. But others had an interest in Don's defenselessness.
It would be a very fast legal proceeding. Don would be sentenced to prison 13 days from the time he first met his court appointed lawyer Tom Kelly. Kelly was a friend of the Assistant U.S. Attorney Dan Scott an appointee of the Carter/Mondale Administration whose Presidential appointment was dependent on the approval of Senator Hubert Humphrey among others. Scott who worked down the hall from Kelly appointed his friend to be Boyd's public defender even though Kelly had rarely if ever taken on that role. When Boyd found out about the close relationship between his defender and his prosecutors he was naturally very unhappy.
As he sat in prison trying to recall all the tumultuous events which had put him behind bars he counted up seventeen hours spent with Kelly working on his defense if you could call it that. Half the time he was meeting with Kelly Don said his defender argued with him to plead guilty. Don refused to.
The FBI agents interviewing Don told him that as many as 17 agents had been following up leads about Don. Because the reputations of a Governor, US Senators and a sitting Vice President and a former Vice President were on the line there was intense newspaper interest in finding out what had happened to the missing million dollars. A blizzard of news reports had routinely put the lost money at 1 million dollars and Don was always been linked to its disappearance thanks to the leaks from the FBI and the many peripheral DFLers who were eager to end the investigation. As the press kept pushing the FBI almost certainly grew impatient to wrap up the investigation and find a guilty party. proceedings to an end.
Whether it was coincidental or not the Federal Judge who presided over Boyd's case was a staunch Republican Edward Devitt who had been elected with Richard Nixon to Congress years before. Devitt had made it clear in Newspapers stories during Watergate that he was fed up with the attack on his friend Richard Nixon. Republicans felt with some justification that the Democrats who controlled the Senate during the Watergate hearings had remarkably selective inquiries. While all manner of Republican skullduggery was exposed the Democrats paid a lot less attention to a number of egregious campaign violations by Democrats. Boyd had heard that Devitt and the Federal Prosecutor Thor Anderson? had both tried to investigate the similar scandal at the Universal Fiberglass plant which took place during the 1964 presidential campaign. As in the case of the Boyd scandals it was said that the records for the Fiberglass company were missing. Having seen Democrats slip by untouched so often It would not be surprising for such a frustrated jurist to use all his judicial powers to make sure at least one guilty Democrat got what was coming to him. Except that Boyd was not interested in politics.
Don certainly seemed guilty. The press and the people feeding information to the press had seen to that. News accounts had been close to unequivocal. Boyd was surely responsible for the million missing dollars. After literally hundreds of stories spelling this out it is little wonder that even Don's friends had a hard time imagining that he might be innocent. Where there's smoke there's fire. Who could blame a Republican judge for drawing the same conclusion the "presumption of innocence" notwithstanding?
If the Investigators, The Press, the jurists, and friends not to mention the readers of the press thought Don must surely be guilty how about the people in DFL circles who would have been even closer to stories about cash stuffed envelopes. Many of them may well have figured that Boyd was guilty simply by his association with so many other hacks and cronies. Certainly these operatives would be eager to see the investigation closed and if the price was one small fish it would be an easy enough price to pay to end what must have seemed like an inquisition.
According to Don, other than his admiration for John Kennedy's call to "ask not what your country can do for you but what you can do for your country" he remained apolitical. He never made a political contribution and actively resisted hiring Anderson Administration cronies forced on his Small Business Center by his boss, Michael Pintar. Having been deprived of the ability to oversee his SBC bookkeeping he became a perfect foil. Like the hacks he was forced to hire, "bagmen" Don called them, Don traveled extensively, negotiated with lots of people and was certainly in the right kind of job to collect political money if he had been inclined to.
And yet despite 17 agents combing through his books and interviewing everyone he knew from Nevada to Maine they were unable to find any connection between Don and the missing million dollars. When a charge against Don was finally handed over to an unwilling lawyer arguing before a hostile judge by Federal Investigators eager to wash their hands of a case which the public and the press were demanding to be settled the only charge that could be leveled at Don was for mail fraud. Don was facing the accusation that he had conspired to use the post office to defraud the Federal government of a paltry $65,000. After Don got out of prison he was able to prove to the IRS that at least $37,000 of the $65,000 he served time for stealing went to his boss Michael Pintar. As for the other $28,000 no one has ever accounted for it. Neither did anyone ever account for the missing million dollars. After it was all over it was estimated that the investigation of the million missing dollars had cost the government $3.300,000 and this did not count Don's speedy trial or his lengthier residence at the Federal prison in Sandstone.
But this could only be proved after Don was released from prison. At the time of his prosecution the only records he could use to defend himself were the 14 bank boxes filled with his own complete business records which had been seized by the FBI. In fact, Don had prepared for this by going to the considerable expense of photocopying the original14 boxes. But the FBI confiscated this second set of records from Don as well. When Don asked to go through his own records the FBI gave him precisely one hour in their evidence room to rummage through his records which were already madly rearranged from the FBI's desperate poking and prodding.
Don asked his court appointed lawyer Kelly to help him get more time to go through the files but Kelly wouldn't ask. This was just one of the many ways in which Kelly refused to provide Don an adequate defense. There would be worse such failures to come as when Kelly refused to call witnesses Don asked for and his failure to return all the evidence Don had handed over to him.
In the short time allotted him Don with his disordered records Don didn't know where to begin looking. Besides he already knew what was in his files.
The Evidence Room in St. Paul's Federal Building was now at Don's unsupervised disposal and near his lay the records of James Manos his erstwhile business associate, consultant, employee and primary accuser.
Don already knew what Manos had told the FBI that he had given Don kickbacks because the FBI repeated the allegation to Don to get him to confess. Don knew why Manos might want to make this accusation because Manos had cried on Don's shoulders about his tax problems with the IRS. Manos' difficulties were simple. He hadn't reported all his income and the IRS was coming after him for taxes he owed them. On one such occasion Don had fatefully jotted down the income figures Manos was giving him in order to help Manos figure out his earnings. The figures simply didn't add up and Don filed the scrap of paper away.
Don suspected that Manos was guilty of double billing because he had spoken with the man who had purchased Manos' Tanglewood Lodge. It was now apparent to the new owner that Manos has used phony bookkeeping to sell the lodge. If Manos had misled his buyer there was every reason to suspect he had done the same thing when filling out his taxes in order to avoid paying his income tax. Don was sure that exposing his Manos' lies would impeach his testimony.
Rather than wasting his hour sorting through his own business records he went straight to his accuser's file. He quickly found ample evidence of Manos deception in the folder and showed it to his lawyer who promptly scolded him for looking at it without permission. Presented with this helpful information Kelly refused to use it even though the law allows defendants something called discovery which entitles them to look at the prosecution's evidence. The Manos file showed $80,000 of income from the Small Business Center that he had not reported on his taxes in correspondence with his personal accountant, Orton Tofte.
Armed with the information from Manos' file Don went to his own daily business logs to prove that Manos had worked for every cent he had been paid including the $80,000 he had hidden from the IRS. Boyd had stashed a copy of these important records away from the FBI.
Don went home to Brimson to work on the defense that his own lawyer seemed so reluctant to prepare. A close friend who was the public relations artist for St. Louis County Federal Savings & Loan, Howard Seivertson helped Don create a simple exhibit for the jury. (By the way today Sievertson is a beloved Minnesota artist who has published numerous books on the history of the Norwegians and others who settled and fished Isle Royal and Minnesota's Northshore.
The FBI had long since stopped telling the press that Don had stolen a million dollars. Despite having 17 agents criss cross America to track down Don's spending they found nothing. For years after his release from prison Boyd would run into flummoxed business people who told him in confidential whispers how they had been visited by the FBI and how the agents had warned them that Don was a crook who they shouldn't do business with. The owner of a small Two Harbors hardware store told Don that the FBI agents that the chainsaws Don had bought from him were paid for with federal money.
The stories were endless. They followed up stories that Don was using county dump trucks to haul his gravel. That charge made the news. They told people the Boyd was using federal money to pay lumber jacks to cut pulp wood for his nonexistent pallet plant. They told others that he was collecting royalties on the same plant. They accused Boyd's friends and children of stashing money away for Don as kickbacks. They told others that Boyd was dallying with other men's wives. His new boss, the hostile William Bechtel told Don's banker Henry Royer in a letter that Boyd got hold of that Boyd was using federal money to buy real estate. The FBI tracked down one of Boyd's old girlfriends in Maine and accused her of hiding money for Boyd. And this is only the tip of the iceberg..
Some of the sleuthing would have been quite comical except for the effect it had on Don. The owner of a rural Two Harbors tavern the "Dixie Star" later told Don that she too had been visited by the FBI. The agents were tracking down a five dollar check that Don had paid her with. The agents told her that they had tried following the check to Las Vegas where a much more famous bar called the Dixie Star was located only to discover that they had tracked the check to the wrong establishment in the wrong state. The federal government spared no expense to find Don Boyd guilty.
Don's meticulous records should have been a godsend for the FBI as no one else associated with the growing scandal seemed to keep any records at all. But the FBI could find no evidence of the missing million dollars in Don's files. The Fed's entire case would have to rest on the testimony of James Manos a man with serious tax trouble.
While the Federal agents felt no compunction about killing Don's cash flow by scaring off all his business associates the Federal Government treated its main witness most generously. While Manos was being investigated for tax fraud by the IRS the Small Business Administration gave him a federal loan to buy a beauty parlor in Minneapolis.
Manos had to claim that his income was much smaller because he had shortchange the IRS. The FBI kept this damning information from both the IRS and Don Boyd who only discovered it because he looked in a file he wasn't suppose to open. And that's what Don's first chart was all about. Manos was claiming that he only worked for 208 days because that's the only income he had reported to the IRS. If the IRS found out that he had earned more they would have demanded payment for the additional earnings which amounted according to Don's logs to $80,000.
The first chart show what Boyd's logs showed. James Manos had put in 607 days work not 208 days of work.
The FBI's entire case against Don was that he had taken or had attempted to take, through mail fraud, kickbacks from his employee James Manos. Who was James Manos?
Manos was a businessman from a Chicago business family. Whatever difficulty he had in honestly reporting his income to the IRS he was good at his job as a business consultant and Don valued his skill. Manos had been recommended to Don by an Ely businessman Dennis Cherne who had worked with Don on his extensive study of northern Minnesota's tourist economy. A copy of the resulting book, which served as a blueprint for later tourist promotions in the area, rests in the Library of Congress.
Boyd like the charming Manos and hired him to work for the Small Business Center. Manos was paid both for contract work for a fixed fee worked out in advance and consulting work for which Manos was paid $150 a day. By accepting his claim that Manos had worked fewer days, 208 compared to 607 days, a desperate FBI could make the plausible claim that the additional $80,000 he had been paid but failed to report on his taxes had instead been given it back to Boyd as kickbacks.
Boyd next had Seivertson make up a chart of the contracts and consulting work that Manos had performed and been paid for.
This showed that Manos earned $36.650 for consulting covering
the program year from July of 72 to about the same date the following year.
When you add the consulting fees for the second program year to the first you can see that, according to Don's records Manos had been paid $71,400 total.
In addition to the time and earnings for Manos' consulting he was also paid for contract work in the amount of $80,750. It was approximately this amount that was never reported to the IRS. The FBI's assumption was that despite any evidence of wrongdoing in his many other business relationships Don Boyd took all of Manos' contract earnings as a kickback.
Now it was time to show what James Manos was claiming. These are the days that Don's log book recorded Manos actually reporting to him. It was the same number of days that Manos was claiming he worked. However.........
Manos calculation of days he worked only counted the days that he reported to Boyd. Manos did not count the days he worked on the road away from Boyd and Manos was a very busy traveler.
The summary final charts summarizing Boyd's findings were not to returned to him by his attorney Kelly and can not be shown here. Nonetheless, the charts, providing that Boyd's log books were honest completely refute James Manos claim that he worked far fewer days than he had been paid for.
When reporters began to notice that Manos records seemed to indicate that after giving Boyd $80,000 his actual earnings were something like $6,000 for two years they couldn't help but ask him what he lived on during this period of time. Manos had no good answer for them. Apparently the FBI did not find this information particularly vexing.
This presentation was too simple to be elegant. If Don's records were correct his chief accuser was lying. James Manos was the only person interviewed by the FBI who was willing to testify against Don. Apparently he found it helpful to cooperate with the FBI. In due course the IRS dropped its case against him and he got a Small Business Administration loan to open an eight chair beauty salon in Minneapolis. Later he would be hired at the princely sum of $100,000 a year by legal friends and associates of Governor turned US Senator Wendell Anderson to manage the newly incorporated Restaurant brokers of Minnesota for them. They kept him employed for ten years safely past the statute of limitations.
Don's lawyer would not use this simple and persuasive evidence in the courtroom. Neither would he call as witnesses the long list of people Don had given him.
Kelly would not call Alan Ballavance who was on NEMDA's payroll and who chauffeured Jim Oberstar around the 8th District on his expense account was not called as a witness.
Kelly would not call Robert Babich, Ballavance boss, who was active in the Oberstar campaign as a witness.
Kelly would not call Gordon Schunerman, Tom Kelm's right hand man who bragged that he had invented the expense account and who was a fundraiser and who Boyd had fired because he suspected he spent all his travel time collecting money for the DFL.
Kelly would not call Tom Evans, Director of wood research for Michigan Tech University.
Kelly would not call James Seiler, State of Minnesota Finance Director.
Kelly would not call the owners of Palletest Corp.
Kelly would not call the officers of Rexnord Corp. of Milwaukee
Kelly would not call Signoid Company Executives or Leo Lucchissi, the Michigan Governor's representative to Michigan Tech or Rudy Esala, Executive Director of the ARDC or Charles Westin Director of Duluth Chamber of Commerce and later Robert Babich's replacement as Director of NEMDA, or Charles Poe Director of the Minneapolis Metropolitan Minority Cener of Bill Gipp, BIA administrator in Minneapolis or Jose Romero, Minority Consultant the list continues. It is quite long but the verdict couldn't wait.
One person who was flown to St. Paul to testify was Roy Fingerson. Fingerson had been the accountant for the US Dept of Commerce who was responsible for the UGRLC. Boyd reported to Fingerson and invoiced him for all his Small Business Center expenses. When he showed up to testify Tom Kelly would not call him as a witness because he only wanted him as a character witness. Fingerson, a Nixon appointee, later wrote to Boyd to explain the politics of the Commerce Department. In the letter he indicated that he was prepared to testify that he had seen nothing wrong in the Small Business Centers financing although he also wrote that he had several pounds of newspaper clippings and complaints about Minnesota's mismanagement of federal funds. Fingerson had to fly back the same day and Kelly never told Boyd about his trip to St. Paul.
One person who did come to testify was, Ted Clays, the man who had purchased Tanglewood Lodge from James Manos. He came prepared to testify about the faulty accounting Manos had showed him about the Lodge. He was hardly sworn in before Judge Devitt stopped the questioning. Devitt ruled that the trial was about Donald C. Boyd not James Manos. No one would be permitted to express doubt about the integrity of the only witness for the prosecution.
Five days later at the end of the week Don Boyd was found guilty of mail fraud. Judge Devitt wanted to give defendant a ten year sentence to be served in a Federal Maximum Security prison outside Minnesota for this first time offense.
Don's boss, Michael Pintar, also had to face the music. He was charged for X counts of various misdeeds. One charge that was not made against him was that of kickbacks. When however a witness for the prosecution raised the possibility of kickbacks this became the basis of an appeal after his initial conviction. After serving three months in prison an appeal court ruled that he deserved a new trial because the prosecution had wrongly raised the possibility of his having committed a crime which they did not initially bring against him. This was enough for Mike's friendly court to overrule his original conviction. This was the end of the Federal drive to punish anyone for the million missing dollars which were never found. It should be noted that the technicality which got Michael Pintar out of prison was the same one that put Don Boyd behind bars for five times as long as his boss. This is a testament to the expensive lawyers hired by somebody to defend Pintar a far cry from the reluctant public defender who seemed most eager to wash his hand from his indigent client Donald Boyd.
Tom Kelly never returned all of the materials that Don had given him for his trial defense. In this Kelly was no different from the FBI which also only sent back about half of the materials they had confiscated from Boyd. Don later filed Freedom of Information suit to reclaim the rest of the material but he was told by the two FBI agents who had first arrested him that it had been destroyed.